Don’t tell SA the problems, Tito, fix them
Mboweni’s statement was a grim summation of where the country is and what is likely to happen over the next few years.
Picture: Phando Jikelo/ African News Agency (ANA)
Finance Minister Tito Mboweni waxed lyrical yesterday in his medium-term budget policy statement, quoting Charles Dickens: “It was the best of times, it was the worst of times. It was the age of wisdom. It was the age of foolishness.”
As the rand slipped even further after some of Mboweni’s numbers revealed precisely how bad the fiscal situation has become, we must ask the minister: What “best of times”? What “age of wisdom”?
Mboweni’s statement was a grim summation of where SA is and what is likely to happen over the next few years.
Economic growth has been revised downwards from 1.5% to 0.7% for 2018. The consolidated budget deficit for 2018-19 has been revised to 4% of gross domestic product (GDP) – an increase from the previous level of 3.6%. It will rise to 4.2% of GDP in 2019-20, but it is expected to stabilise at 4% in subsequent years.
Gross debt is predicted to stabilise at 59.6% of GDP in 2023-24 (in February this year, the budget forecast was that it would be at 56.2% of GDP in 2021-22.) Tax revenue for 2018-19 is projected to fall R27.4 billion short of the February estimate.
There was some good news in that Mboweni and his Treasury experts don’t foresee tax increases … and the minister announced a zero VAT rating for sanitary pads, bread and cake flour.
At the same time, he revealed that there will be a R5 billion bailout for SA Airways; as well as R5.8 billion for Sanral and R2.9 billion for the Post Office.
But Mboweni also grasped the thorny political nettle of cadre deployment by saying the civil service wage bill must be reduced. Specifically, he said the Cabinet – currently at 70 ministers and deputy ministers – is far too large.
You’ve sketched the problems, minister. Now, let’s see the solutions.
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